Jet bidders unwilling to take over Rs 600 cr wage bill

The potential bidders of grounded private airlines Jet Airways have been trying to pass on the liabilities of pending salaries of the employees to the banking consortium, according to the highly-placed sources.

A senior banking official, wishing anonymity told DH that Jet has in excess of Rs 570 crore of pending salaries to the employees. "They have not communicated any withdrawal of the bid to us. They are trying to pass the pending wage bill on us," a senior SBI official said.

Earlier on Tuesday, it was reported that all shortlisted bidders, including Abu Dhabi-based Etihad Airways, are learnt to have backed out of the process of investing in grounded Jet Airways. Etihad was the only airline to have expressed an interest to buy a controlling stake in Jet.

The other shortlisted bidders were sovereign fund NIIF and private equity firms TPG Capital and Indigo Partners.

The banking consortium, led by State Bank of India, has asked for the binding bids from all the four shortlisted bidders by May 10. However, the bidders have been bargaining for about 80% haircut in the Jet debt, which amounts to almost Rs 8,500 crore.

Earlier, the lenders of the grounded private sector carrier Jet Airways have decided not to convert its debt into equity in a bid to make the recovery of their dues efficient.

Instead of this, the banks have taken a binding agreement from Jet founder Naresh Goyal, according to which he is supposed to sell his stake as soon as the bankers shortlist the bidder for the company.

If the debt to equity swap had taken place, Goyal’s stake would have come down from current level of 51% to 25.5%, Etihad’s stake would have halved from 24% to 12% and the public stake would have also halved from the current 25% to 12.5%. In this scenario, the banks would have been able to take control of the troubled airlines, which they haven’t done till now.

The consortium of banks had assured Rs 1,500 crore to Jet but released just Rs 200 crore. A fresh request for Rs 983 crore was rejected.

However, lenders on their part, justified the decision saying that an infusion of Rs 400 crore would have helped Jet survive for only 3-4 days more.

In case, the negotiations with the potential bidders, don’t get through, bankers are not keen to take Jet to NCLT. “We will go for auctioning as we did in Mallya’s case. We won’t opt for NCLT. We will sell all his (Goyal’s) pledged shares and assets with us and collect as much amount as possible,” the source said.

Goyal has pledged 31.2% of his stake in Jet with the banks as of date.